I used a HELOC to flip my first house last year. Wells Fargo only allowed me to take out 50% of my equity, but it gave me $50k to use to buy a $50k foreclosure. (I had $30k in the bank for the repairs.) It wasn't my initial intention to use a HELOC to buy the foreclosure, but half way through closing the bank I was using said that the $50k loan was too small and wouldn't lend to me. I was able to get the HELOC in 3 weeks, which I was told was pretty fast. ... but now that I've got the HELOC setup, I should be able to access the cash much faster.
My problem is that I can't find banks interested in doing them. I have 800+ credit, excellent income, and pretty good equity position in my home, but they all want to do complete refis or nothing at all. Are there any national lenders who are interested in doing them? Certainly not my local banks!
@@hdtwal1den Wells Fargo is who I have my mortgage through, so I figured it would be easier to use them. I was in a time crunch. I was also told by the Wells Fargo loan guy to not say that I was using to purchase a house, otherwise they would increase the interest rate, etc. (Truth be told, I didn't use the HELOC money to do the initial buy, but instead used it to pay back my friend who loaned me the money for the purchase.)
So I'm balls deep in my first ever real estate deal (all cash BRRRR). Saw another deal come on the market and I'm fully tapped. Showed it to 2 people that have funds and they're not interested. Hard money only covers up to 90%. Watched this video and immediately applied for a HELOC. thanks guys and keep up the good work!
We used a HELOC to get our business up and running and for the downpayment on our first BRRRR. (we are in rehab phase right now). The payment on the HELOC is interest only, and when we refinance the property we will pay it down to a 0 balance again. Rinse, repeat :)
@@RyanSheeldz once you get approved for the heloc they don’t care how you spend it. If you’re buying a house the seller only sees you have your down payment , they don’t care where it came from.
Brandon!! I've been listening to you since 2016. I bought my first investment property in SC two years ago (Jan 2022) for $60k, and just went under contract yesterday (Aug 2024) to sell it for $139k after $40k additional investment. I NEVER thought back in 2016 I'd be in a place to buy a property on my own and flip it. But after a divorce in Washington and slumming it for two years in Cali, I finally had enough to pull the trigger. This one sale will clear all my debt and leave me in the black about $30k. I'd have used a HELOC, but the debt was unbearable after I bought my second property. I learned a lot about what to do and not to do! Believe me. NOW, I can use a HELOC on this new property and, with my earnings, pave that into a new investment. It took 6 long years of listening and learning with bigger pockets to finally buy my first investment, two more years to get passed Capital Gains (house hacked), and here I am doing it AGAIN! You guys are awesome! Thank you!
I used a HELOC to purchase my first property using equity in my primary home. The bank gave me $34k on my heloc using 70% LTV (Loan to value). The market continued to appreciate so 18 months later I applied for a heloc with a DIFFERENT bank, who gave me 90% LTV, granting me $52,000 instead of $34k. I'm now buying my 2nd rental property and will still have about $15,000 left in my heloc - which is only to be used in a dire emergency. My heloc goes for 15 years and I'll have it paid off in about 8 - allowing me to rinse and repeat.
HELOC changed the game instantly, coming at a purchase like a cash buyer worked out so much better. Picked up my first rental, about to pull the trigger on another one. Also, the deal checker tool is perfection, saved me from going over the 50% rule.
@@kylesummers7449 I’m now up to 4 rental properties, one is duplex, thinking about purchasing apartments now. I’m cash flowing as much as I make in my full time job, it happened so fast.
Is this a good time to get HELOC? Interest rates are likely heading north so this being a variable rate concerns me. Also what if property prices do down? Do I have to return part of the funds if i used all my heloc to maximum? Also you mentioned returning funds to heloc as you close deal after deal, is there a payment penalty or cost to do each transaction?
@@ItsGrawVez yes, it does cash flow. I factored in the HELOC repayment in my numbers prior to placing offers on properties My strategy is to aggressively pay off the HELOC and repeat again, if needed.
Is it smart to use a HELOC for a property that's not a fixer upper? Would it be better to do a cash out refinance? I've found a property I like and it's around $215, but I only have about 185k available to spend. I'm not sure what is the best way to make up that 40-50k gap. I have two duplexes that are completely paid off. I have one duplex I have a mortgage on with about 130k in equity and my personal home has about 130k in equity also.
Hey Brandon thanks for the great video. I have one quick question and hopefully not a hard one. Say I get a HELOC and I have good credit score but not a lot of savings to support the initial paperwork when asking for it... so here is the question, if they initially give a lower access than I originally request for, is there a way to later go back and ask for an increase? Similar to a PLOC or does it work differently? Thanks
If I used HELOC for down payment of 20% would that mean I'd have 2 simultaneous loan payments due? Wouldn't that make it harder to be cash flow positive until the heloc is paid off?
The HELOC was pivitol in me being able to buy my properties. Hoping to reappraise it too and get 80% of the appraised value instead of what I got initially which was 80% of the purchase price. I rennovated the place after I bought it for cash so I should be able to get a large line of credit at the one year mark.
Thank you so much for this video! I really appreciate, I was referred by Ted, he helped me throughout the whole process with no extra cost. This is my referral as promised mx076 on wickr or telegram.
So question that I can find the answer too. When the interest rate is variable is the monthly payment also variable ?? Or with the monthly stay the same and the amount that goes to principle vary??
Can someone help me figure this out? I have 160k in equity in my home. If I wanted to take out a heloc of 45k to use as 20% down on investment properties (mid-level homes where I live). I was then thinking I could get a mortgage on these homes. To get another mortgage does my debt-to-income ratio factor change at all with the potential earnings of a new investment property, or would it be like assuming a normal mortgage? Also, going forward can you use rental income as a reported income when applying for more mortgages down the line? Is there a better way to invest with my situation? Please let me know.
HELOC is revolving credit just like a credit card. When you open and dont use it yes it boosts because on reports it pads your credit utilization. Say you have 1 credit card using $1k of you 3k limit your using 33% utilization. Say you get a HELOC for 97k and dont use it immediately. Your credit report shows 100k in available revolving credit with now just a utilization of 1% from the 1k you owe on your initial CC. The more you use of your HELOC limit it will dip your score for high utilization. This is good or bad depending on what your goal is. Hope this explanation helps.
what's the difference between using a heloc to purchase vs. saving up money to put down a down payment on a home? is it just that it takes longer to save, while you can get a heloc right away?
So I bought my first rental property for 45,000 cash and I’m trying to buy another rental property, can I use the money(equity) from my first house to buy a property that also costs 45,000? And then put a loan on my first rental again or that is not how it works.. I’m really confused
Great video, thank you! My wife and I are wanting to invest in real estate here in Florida. We just got pre approved for a HELOC with our credit union. We are hoping to get approximately $70k+ to use towards a down payment. They approved us with a 4% rate, 10 years, interest only, 90% LVT. We plan on sitting on that money until we can find a good deal that works for us. I think that's a good deal...what do you think and advise sir? Thank you in advance!
One thing to look out for... or prepare for... is the hit your credit will take for maxing out that line of credit when you use it for a down-payment... assuming you're going to quickly refinance out into a traditional mortgage after using the HELOC to acquire the property. I would tell your CU exactly what the funds are being used for and see if you can also get pre-approved for the refi that will soon follow... or work out some sort of deal ahead of time.
@@skyblue9991 Thank you for that info. Once we aquire the HELOC, I will have to educate myself on how to go about refinancing it and all. I'll just watch a few UA-cam videos on the topic and get good feedback, like the feedback I just got from you. Thank you! 👍
First!.... the thing I don’t understand is some of the examples from your real estate investing book doesn’t explain how the heloc payment is incorporated in the in cash flow especially when house hacking a triplex for example I noticed an example didn’t cover your cost for water and utilities or does a simple rent increase fix that I would love to hear some feedback
Good point. I have another question, or two. 1. Where are you going to get a HELOC? Most banks I've talked to when buying a property basically said they don't really do that anymore. Sounds weird. 2. At what point do you consider not doing a HELOC? Unless I'm missing something, you can buy more properties but the property you used to get the HELOC, you no longer cash flow correct?
@@pohump Anywhere. You won't be talking to a bank about buying a property and a HELOC at the same time. Get a HELOC from a bank. Then use it to buy a property. Likely you'll need 75% LTV (not 90 as mentioned in the video) and you need the equity!!! Unless you've built up at least $50,000, it's probably not even worth considering. At 75% LTV, you're only looking at getting $37,000. That's hardly going to cover a down payment on a property, forget rehab and stuff.
@@pohump HELOC is short term. You either rehab to increase value, then refinance to pay off the HELOC, or you are using the new cash flow to pay down the HELOC fast. It has nothing to do with the current property's cash flow. The HELOC is a line of credit, like a credit card. You shouldn't think of it as tied to a property that is no longer cash flowing. The property it is tied to is only collateral, not the actual thing you are using to pay it off.
Great Video! Do you recommend getting a Heloc first then applying for a loan or applying for a loan then do the Heloc? I own a condo with no mortgage, want to use the equity to buy an investment property.
If i put 50000$ down on a 130,000$ property 4.25%interest, would it be worth it to use a HELOC for 30,000$ to to bring the mortgage down? Or just pay down the mortgage?
If I buy a rental under my llc using the equity from my primary residence heloc and then paying the heloc off with the rental income is this a taxable event, does the irs look at this as me paying myself from my company. Or is it viewed as the company paying a debt.
Our lender refuses to do HELOCs and even stated they don’t recommend them to owners due to the risk. Hmmm, risk for whom. Bank/lender? Or homeowner? Are those of you who are successfully getting HELOCs going to your current mortgage holder, or a different institution?
For sure a different lender. New business is good for them. It really is additional risk if you use the same bank as your mortgage. No risk for a new bank though. They've got a house as collateral!
This is a valuable video thank you! Quick question. Once you calculate how much your credit line will be, I still don't understand what it means when my bank says there is a 20yr draw period followed by a 20yr repayment. Sorry im new but does that mean I can keep using the same credit line over and over for 20yrs only paying interest before they finally want the entire thing back? Like a credit card that doesn't expire for 20yrs? Can someone break down those payments for me please? Lets say I calculate my credit line to be $100k @ 4.5%.
20yr draw period followed by a 20yr repayment. IT means in the first 20yrs you can use that money and put back.use it again and put back..the 2nd 20yrs you have to start paying back the money and you have 20yrs to return them plus interest.and you cannot borrow anymore in the last 20yrs.
@@amgmedia808 Awesome ok thank you!. Im curious if I were to get $100k HELOC to be used as a down payment on a convention loan, do they frown upon that? Using a loan to secure another loan? Or do they see that $100k as cash?
This is such a good video! I am a mortgage banker in Scottsdale AZ and I always preach the benefits of using the equity in your primary residence to invest in real estate. You can borrow money at such a low rate you are really able to get a fantastic ROI all things considered! How about you all, are any of you in the real estate/lending industry have any related tips or thoughts, if so do you have a UA-cam channel?
The home equity is the safest and mortgage backbone, don’t hesitate to learn more. If cares for bn heloc user. hit us on WhatsApp +1 (201) 830-1507 for better conversations
Businesses use lines of credit all the time. If you're cash flow positive, & know the difference between amoritized interest, & simple interest, it's a no brainer.
People really struggle with this. My HELOC is 6% but my mortgage is 4%, so the HELOC is worse. No. Your mortgage is amortized and your HELOC is simple. HELOC is MUCH better.
Do any of your books or videos explain how to prepare the money from a HELOC to submit a purchase proposal? They want me to show proof of funds but I don't know unless I take the money out into my account. Good video.
Super helpful thank you. I have $78k in savings and can get up to $80k from a HELOC. I'm planning on using a mixture of savings and HELOC, so that I keep cash ~$30k cash reserve in a high yield savings account (4.8% interest) and have enough for a 20% down payment on an investment property that cashflows enough to cover the investment property mortgage + expenses and HELOC monthly payment. I've secured a fixed rate HELOC at 7% from my credit union and I intend to pay that off in 5-10 years from the cash flow of the investment property. I can afford to, and don't mind if I have to dip into my own pockets if some months don't break even, but the goal is to profit each month. What do you think of this investment strategy? Curious what you think given my situation. For more context I save $30k/year with my job that pays $155k/year, I have a long term rental property that pays it’s mortgage and landscaping expenses, and the primary residence I live in.
But with helocs having a variable interest rate, isn’t that similar to the bubble that crashed the economy before or not really? If not, how so? Thanks awesome video.
If you use a heloc, best to consider it short-term debt. The shorter the better. Interest rates could start rising anytime, and the HELOC is very susceptible to it
Great video! Helocs are a fantastic way to invest. It's a shame that I have a rental property paid off (free & clear) and can't get a Heloc on it. So frustrating. What do you suggest other than a cash out refi?
Hey brandon, great video. Thanks for the info. Quick question tho my friend if you could help me understand this one thing. So lets say in my case the bank will give me 100 grand heloc off my property. Now with the 100 grand i find another property worth 200 grand and i use the 100 to put a downpayment, who pays the remaining 100?
HeavyJOE you get a loan for the remaining money, then once you have a tenant in place you refinance the whole deal at the actual new value of the property, like a cash out refi, and use the cash you pull out of it to pay off the HELOC.
Hi, Can you share a list of companies that provide heloc as separate product. My mortgage company does not provide heloc and I dont want to break my mortgage with them. I am in Canada
I have used a heloc to purchase two rental properties. I purchased directly from my heloc. MY CPA told me this is a no no, that I would have to lend to my LLC first. What are your thoughts? I was thinking just transferring the money to my LLC and calling it a owner contribution
I think it's still a good idea. Anything works as long as it works or until it doesn't. Lol We used our HELOC on our primary for about 2/3 of a new rental late last year. We have several rentals so we expect to have the new HELOC paid off this time next year. Pretty quick. Only 18 months. But my partner and I have been debt free. (For about 20 minutes) And that tastes pretty good. Can't wait to be debt free again.
Had to watch this video because we had no idea what Heloc stood for. Haven't ever actually borrowed against the equity on houses that we have. Awesome strategy!
Have you ever seen lenders build loans against land? I have 14 acres worth about $120,000 and I was thinking of tapping into the value of the land to help buy investment properties
I used this strategy to pay for my last 3 rental properties. The bank has told me my debt to income ratio is to high and won’t let me finance my last rental. So it is still rapped up in my HELOC. Short of paying off the debt (which I can’t do fast enough) what can I do??
Almost all banks do not HELOC rental properties. In fact my son has found one he thinks might do it, but he lives in one side and rents the other so he has that going for him.
Why not just get a $100,000 loan to invest with? or a 2nd mortgage? Why a HELOC? Either way, you're still using the bank/tenant's money, but with a HELOC, you're potentially putting the house at risk. If the value of the property that the HELOC is secured with drops significantly, can't the bank cancel the HELOC and demand full repayment?
Question, so if i use a HELOC do i now have 3 loans to pay off? 1st loan, my original home/rental property mortage. 2nd loan, the HELOC loan. 3rd loan, the property that i purchased with the HELOC. Can someone answer this please
What are the dangers of using HELOCS if when you try to refinance the home you invested in doesn’t appraise to what you expected and have difficulty paying off the loan. Since it’s an ARM, the interest rate can raise by a fair amount and can put you in deep trouble, right? Also, is there a difference between using a HELOC for a rental compared to your primary residence?
It's true. Always weigh the risks and rewards. You can probably refinance to pay off some of it, assuming you've rehabbed and reappraised to a higher value. Then you must dump funds in to get it paid off first. Even at the higher rate though as long as a majority of it is paid off, you are only paying the higher interest on a small amount. If you have a day job, you can be cash flow negative for a short time. If you are dependent on the cash flow, it could be trouble. HELOC for rental compared to primary doesn't matter much. Whatever you have the most equity in is going to be the best choice.
I tried to use a HELOC for a new real estate deal, but my lender would not allow “loaned” amounts in a down payment, only cash. I had to use the HELOC capital for renovations instead.
I'm in early stages of trying to get a HELOC to purchase a new home. One of my properties is paid in full and worth 300k. It is currently a rental property. Will it be hard to get a Heloc in this environment?
but if you HELOC that 100k how would you buy another 200k property? would the bank add another 100k on top of that heloc money ? the bank would essentialy be giving you 2 loans. one mortage loan and another from the heloc. seems like that would be impossible to get and keep on brrrr'ing
you're using all borrowed money. You don't have to take money out of your own savings account. But don't be fooled. Once you borrow that money it's your money. Your responsible for it, and you'll have to pay it back one way or the other. Hopefully with rental income.
Brandon, what investing have you been up to lately? Last I heard, you did the mobile home park deal with Mindy and other investors but I havent heard much since then..
If the property is worth 200K, and you own 120K in equity, how can you get a HELOC for 90% of the 200K? Wouldn't you only be able to get 90% of the 120K - the actual equity you own?
Last week I was talking with a real estate Investor and we got on the subject of using a HELOC to buy another property. To my dismay, he told me that the new tax law prohibits the use of a HELOC to purchase a property. Is this true or is he misinformed?
What are your thoughts on using a HELOC?
Let us know what you think below!
As long as you are getting the cash flow and ROI you want and the numbers work in your favor I am ALL FOR IT!
I used a HELOC to flip my first house last year. Wells Fargo only allowed me to take out 50% of my equity, but it gave me $50k to use to buy a $50k foreclosure. (I had $30k in the bank for the repairs.) It wasn't my initial intention to use a HELOC to buy the foreclosure, but half way through closing the bank I was using said that the $50k loan was too small and wouldn't lend to me. I was able to get the HELOC in 3 weeks, which I was told was pretty fast. ... but now that I've got the HELOC setup, I should be able to access the cash much faster.
My problem is that I can't find banks interested in doing them. I have 800+ credit, excellent income, and pretty good equity position in my home, but they all want to do complete refis or nothing at all. Are there any national lenders who are interested in doing them? Certainly not my local banks!
ModernCicero try looking at smaller business banks, they are more heloc friendly. Hope this helps u out 👍🏾
@@hdtwal1den Wells Fargo is who I have my mortgage through, so I figured it would be easier to use them. I was in a time crunch. I was also told by the Wells Fargo loan guy to not say that I was using to purchase a house, otherwise they would increase the interest rate, etc. (Truth be told, I didn't use the HELOC money to do the initial buy, but instead used it to pay back my friend who loaned me the money for the purchase.)
So I'm balls deep in my first ever real estate deal (all cash BRRRR). Saw another deal come on the market and I'm fully tapped. Showed it to 2 people that have funds and they're not interested. Hard money only covers up to 90%. Watched this video and immediately applied for a HELOC. thanks guys and keep up the good work!
Where are you now? How have things gone? Have you gotten. your first deal done? Hoping for a response, good luck!
We used a HELOC to get our business up and running and for the downpayment on our first BRRRR. (we are in rehab phase right now). The payment on the HELOC is interest only, and when we refinance the property we will pay it down to a 0 balance again. Rinse, repeat :)
I am just looking at the HELOCs for my first property!
Did you go with a variable interest or fixed rate?
i didnt think you could use a heloc (essentially a credit card with lower interest) as a DP. can you?
@@RyanSheeldz once you get approved for the heloc they don’t care how you spend it. If you’re buying a house the seller only sees you have your down payment , they don’t care where it came from.
Kim, how did maxing out the HELOC affect your credit for the refi?
Brandon!! I've been listening to you since 2016. I bought my first investment property in SC two years ago (Jan 2022) for $60k, and just went under contract yesterday (Aug 2024) to sell it for $139k after $40k additional investment. I NEVER thought back in 2016 I'd be in a place to buy a property on my own and flip it. But after a divorce in Washington and slumming it for two years in Cali, I finally had enough to pull the trigger. This one sale will clear all my debt and leave me in the black about $30k. I'd have used a HELOC, but the debt was unbearable after I bought my second property. I learned a lot about what to do and not to do! Believe me. NOW, I can use a HELOC on this new property and, with my earnings, pave that into a new investment. It took 6 long years of listening and learning with bigger pockets to finally buy my first investment, two more years to get passed Capital Gains (house hacked), and here I am doing it AGAIN! You guys are awesome! Thank you!
I used a HELOC to purchase my first property using equity in my primary home. The bank gave me $34k on my heloc using 70% LTV (Loan to value). The market continued to appreciate so 18 months later I applied for a heloc with a DIFFERENT bank, who gave me 90% LTV, granting me $52,000 instead of $34k. I'm now buying my 2nd rental property and will still have about $15,000 left in my heloc - which is only to be used in a dire emergency. My heloc goes for 15 years and I'll have it paid off in about 8 - allowing me to rinse and repeat.
K. Hall what are the requirements / criteria to get a HELOC?
can somebody say 2008?
@@bryanshealy1260 lol
@@bryanshealy1260
You called it lol
I like that you have a plan. I hope everything goes right.
HELOC changed the game instantly, coming at a purchase like a cash buyer worked out so much better. Picked up my first rental, about to pull the trigger on another one. Also, the deal checker tool is perfection, saved me from going over the 50% rule.
@Robert Clark I have an offer in on duplex rite now, hopefully I will know by tomorrow.
Congrats! How are your properties doing now? Hopefully you were able to get that second one! Good luck to you
@@kylesummers7449 I’m now up to 4 rental properties, one is duplex, thinking about purchasing apartments now. I’m cash flowing as much as I make in my full time job, it happened so fast.
@@calivalley9056 I’d love to chat sometime! I’m in the process of getting a HELOC for investing and I’d love to pick your brain.
Great Video Brandon! Liked how you broke it down. HELOC's can be a great way to keep scaling in real estate!
Being able to scale is the most important thing in my opinion.
Yeo, heloc is a great way of kip scaling in big estate. For any inquiries on heloc, dm +1 (201) 830-1507
HELOC vs refinance rental properties, vs cash. What's the pro/con of each? And would bank ever ask to repay HELOC back instead of interest only?
Is this a good time to get HELOC? Interest rates are likely heading north so this being a variable rate concerns me. Also what if property prices do down? Do I have to return part of the funds if i used all my heloc to maximum? Also you mentioned returning funds to heloc as you close deal after deal, is there a payment penalty or cost to do each transaction?
Great question. Been wondering what happens in the down turn
It’s like a credit card. You have to pay what you took out no matter what.
So if have 150,000 in equity, but i only want to take out 70,000. Once i pay it back, I can use it again? Would i have to re apply?
My first HELOC funds this Friday!
Can you share how you are using it?
@@ItsGrawVez I used some funds from a HELOC as a down payment for one of my rental properties.
@@lawrencebriggs did it still cashflow, assuming you had a mortgage on the rental. What was the strategy to get your HELOC draw back?
@@ItsGrawVez yes, it does cash flow. I factored in the HELOC repayment in my numbers prior to placing offers on properties My strategy is to aggressively pay off the HELOC and repeat again, if needed.
That intro beat sounds fresh! Thanks for the great video.
Is it smart to use a HELOC for a property that's not a fixer upper? Would it be better to do a cash out refinance? I've found a property I like and it's around $215, but I only have about 185k available to spend. I'm not sure what is the best way to make up that 40-50k gap. I have two duplexes that are completely paid off. I have one duplex I have a mortgage on with about 130k in equity and my personal home has about 130k in equity also.
Is it better to use HELOC or pay cash to buy a rental property? TIA in advance for your reply.
You’ve really educated me bro big ups🖤
Good morning,
Would you please let me know the mayor Risks of getting a HELOC?
Can one get HELOC if house is all paid for and no job?
Hey Brandon thanks for the great video. I have one quick question and hopefully not a hard one. Say I get a HELOC and I have good credit score but not a lot of savings to support the initial paperwork when asking for it... so here is the question, if they initially give a lower access than I originally request for, is there a way to later go back and ask for an increase? Similar to a PLOC or does it work differently?
Thanks
If I used HELOC for down payment of 20% would that mean I'd have 2 simultaneous loan payments due? Wouldn't that make it harder to be cash flow positive until the heloc is paid off?
Following...
Yup if the rent doesn’t cover both loans. Heloc is usually best for emergency and quick cash but rates may be higher than mortgages.
The HELOC was pivitol in me being able to buy my properties. Hoping to reappraise it too and get 80% of the appraised value instead of what I got initially which was 80% of the purchase price. I rennovated the place after I bought it for cash so I should be able to get a large line of credit at the one year mark.
Great video!
Thank you so much for this video! I really appreciate, I was referred by Ted, he helped me throughout the whole process with no extra cost. This is my referral as promised
mx076 on wickr or telegram.
If I use heloc, flip and sell, of i pay back the heloc, does that wrote off for cap gains?
Would you recommend using liquid cash or HELOC for buying a property?
@Robert Clark What do you mean, "have a team"?
So question that I can find the answer too. When the interest rate is variable is the monthly payment also variable ?? Or with the monthly stay the same and the amount that goes to principle vary??
As always you are on point! Spokane Wa here!!
Can someone help me figure this out? I have 160k in equity in my home. If I wanted to take out a heloc of 45k to use as 20% down on investment properties (mid-level homes where I live). I was then thinking I could get a mortgage on these homes. To get another mortgage does my debt-to-income ratio factor change at all with the potential earnings of a new investment property, or would it be like assuming a normal mortgage? Also, going forward can you use rental income as a reported income when applying for more mortgages down the line? Is there a better way to invest with my situation? Please let me know.
Does using a heloc affect your credit score like when you max out a credit card?? Does it make it hard when refinancing
HELOC is revolving credit just like a credit card. When you open and dont use it yes it boosts because on reports it pads your credit utilization. Say you have 1 credit card using $1k of you 3k limit your using 33% utilization. Say you get a HELOC for 97k and dont use it immediately. Your credit report shows 100k in available revolving credit with now just a utilization of 1% from the 1k you owe on your initial CC. The more you use of your HELOC limit it will dip your score for high utilization. This is good or bad depending on what your goal is. Hope this explanation helps.
So you don’t count the downpayment when calculating equity? Just what you’ve paid back on the mortgage?
what's the difference between using a heloc to purchase vs. saving up money to put down a down payment on a home? is it just that it takes longer to save, while you can get a heloc right away?
i still dont get it. how does a bank make any money. how will the line of credit get pay back?
So I bought my first rental property for 45,000 cash and I’m trying to buy another rental property, can I use the money(equity) from my first house to buy a property that also costs 45,000? And then put a loan on my first rental again or that is not how it works.. I’m really confused
Great video, thank you! My wife and I are wanting to invest in real estate here in Florida. We just got pre approved for a HELOC with our credit union. We are hoping to get approximately $70k+ to use towards a down payment. They approved us with a 4% rate, 10 years, interest only, 90% LVT. We plan on sitting on that money until we can find a good deal that works for us. I think that's a good deal...what do you think and advise sir? Thank you in advance!
One thing to look out for... or prepare for... is the hit your credit will take for maxing out that line of credit when you use it for a down-payment... assuming you're going to quickly refinance out into a traditional mortgage after using the HELOC to acquire the property. I would tell your CU exactly what the funds are being used for and see if you can also get pre-approved for the refi that will soon follow... or work out some sort of deal ahead of time.
@@skyblue9991 Thank you for that info. Once we aquire the HELOC, I will have to educate myself on how to go about refinancing it and all. I'll just watch a few UA-cam videos on the topic and get good feedback, like the feedback I just got from you. Thank you! 👍
Hey just curious..... im in Florida as well wondering what lender you went with?🤔
Do I have to own my home free and clear to get approved & will it work with a quitclaim deed or do I have to have a warranty deed?
First!.... the thing I don’t understand is some of the examples from your real estate investing book doesn’t explain how the heloc payment is incorporated in the in cash flow especially when house hacking a triplex for example I noticed an example didn’t cover your cost for water and utilities or does a simple rent increase fix that I would love to hear some feedback
Good point. I have another question, or two.
1. Where are you going to get a HELOC? Most banks I've talked to when buying a property basically said they don't really do that anymore. Sounds weird.
2. At what point do you consider not doing a HELOC? Unless I'm missing something, you can buy more properties but the property you used to get the HELOC, you no longer cash flow correct?
@@pohump Anywhere. You won't be talking to a bank about buying a property and a HELOC at the same time. Get a HELOC from a bank. Then use it to buy a property. Likely you'll need 75% LTV (not 90 as mentioned in the video) and you need the equity!!! Unless you've built up at least $50,000, it's probably not even worth considering. At 75% LTV, you're only looking at getting $37,000. That's hardly going to cover a down payment on a property, forget rehab and stuff.
@@pohump HELOC is short term. You either rehab to increase value, then refinance to pay off the HELOC, or you are using the new cash flow to pay down the HELOC fast. It has nothing to do with the current property's cash flow. The HELOC is a line of credit, like a credit card. You shouldn't think of it as tied to a property that is no longer cash flowing. The property it is tied to is only collateral, not the actual thing you are using to pay it off.
Great Video! Do you recommend getting a Heloc first then applying for a loan or applying for a loan then do the Heloc? I own a condo with no mortgage, want to use the equity to buy an investment property.
I love you guys.
If i put 50000$ down on a 130,000$ property 4.25%interest, would it be worth it to use a HELOC for 30,000$ to to bring the mortgage down? Or just pay down the mortgage?
If I buy a rental under my llc using the equity from my primary residence heloc and then paying the heloc off with the rental income is this a taxable event, does the irs look at this as me paying myself from my company. Or is it viewed as the company paying a debt.
Following...
Our lender refuses to do HELOCs and even stated they don’t recommend them to owners due to the risk. Hmmm, risk for whom. Bank/lender? Or homeowner? Are those of you who are successfully getting HELOCs going to your current mortgage holder, or a different institution?
For sure a different lender. New business is good for them. It really is additional risk if you use the same bank as your mortgage. No risk for a new bank though. They've got a house as collateral!
Can the HELOC be taken out under a business name 🤔?
This is a valuable video thank you! Quick question. Once you calculate how much your credit line will be, I still don't understand what it means when my bank says there is a 20yr draw period followed by a 20yr repayment. Sorry im new but does that mean I can keep using the same credit line over and over for 20yrs only paying interest before they finally want the entire thing back? Like a credit card that doesn't expire for 20yrs? Can someone break down those payments for me please? Lets say I calculate my credit line to be $100k @ 4.5%.
20yr draw period followed by a 20yr repayment. IT means in the first 20yrs you can use that money and put back.use it again and put back..the 2nd 20yrs you have to start paying back the money and you have 20yrs to return them plus interest.and you cannot borrow anymore in the last 20yrs.
@@amgmedia808 Awesome ok thank you!. Im curious if I were to get $100k HELOC to be used as a down payment on a convention loan, do they frown upon that? Using a loan to secure another loan? Or do they see that $100k as cash?
So you don't have to use the HELOC funds on the house itself?
This is such a good video! I am a mortgage banker in Scottsdale AZ and I always preach the benefits of using the equity in your primary residence to invest in real estate. You can borrow money at such a low rate you are really able to get a fantastic ROI all things considered! How about you all, are any of you in the real estate/lending industry have any related tips or thoughts, if so do you have a UA-cam channel?
The home equity is the safest and mortgage backbone, don’t hesitate to learn more. If cares for bn heloc user. hit us on WhatsApp +1 (201) 830-1507 for better conversations
Businesses use lines of credit all the time. If you're cash flow positive, & know the difference between amoritized interest, & simple interest, it's a no brainer.
People really struggle with this. My HELOC is 6% but my mortgage is 4%, so the HELOC is worse. No. Your mortgage is amortized and your HELOC is simple. HELOC is MUCH better.
For those novice, contact us +1 (201) 830-1507 WhatsApp, for more inquiries
What about if you have 30k equity can you use tht?
If you use heloc to buy a rental is the heloc tax deductible?
No
Can I get a HELO on paid off land with a paid off mobile home on it?
how do you use that new value money to pay off your heloc and get a new mortgage?
Do any of your books or videos explain how to prepare the money from a HELOC to submit a purchase proposal? They want me to show proof of funds but I don't know unless I take the money out into my account. Good video.
Thank You🙏🏾
Super helpful thank you. I have $78k in savings and can get up to $80k from a HELOC. I'm planning on using a mixture of savings and HELOC, so that I keep cash ~$30k cash reserve in a high yield savings account (4.8% interest) and have enough for a 20% down payment on an investment property that cashflows enough to cover the investment property mortgage + expenses and HELOC monthly payment.
I've secured a fixed rate HELOC at 7% from my credit union and I intend to pay that off in 5-10 years from the cash flow of the investment property. I can afford to, and don't mind if I have to dip into my own pockets if some months don't break even, but the goal is to profit each month.
What do you think of this investment strategy? Curious what you think given my situation.
For more context I save $30k/year with my job that pays $155k/year, I have a long term rental property that pays it’s mortgage and landscaping expenses, and the primary residence I live in.
This is such a great idea. Love it!
Offer To Close don’t get it twisted, is surface web cyber on point... He’s highly recommended 💯 💯 💯
But with helocs having a variable interest rate, isn’t that similar to the bubble that crashed the economy before or not really? If not, how so? Thanks awesome video.
If you use a heloc, best to consider it short-term debt. The shorter the better. Interest rates could start rising anytime, and the HELOC is very susceptible to it
You can find fixed rate HELOC’s, you just pay an additional fee or slightly higher APR.
Does this only work for properties with a mortgage?
Thank you for the great content!!
If I decide to rent out my primary residence will the Heloc funds still be available if my home is no longer owner occupied?
No you can lose it
Great video! Helocs are a fantastic way to invest. It's a shame that I have a rental property paid off (free & clear) and can't get a Heloc on it. So frustrating. What do you suggest other than a cash out refi?
If you're going to buy more properties in the future, then yes get a loan on it. Otherwise enjoy the greater income a paid off property provides.
I have multiple lines of credit against rental prooerties that I own free and clear. Try a local bank or a portfolio lender.
Hey brandon, great video. Thanks for the info. Quick question tho my friend if you could help me understand this one thing. So lets say in my case the bank will give me 100 grand heloc off my property. Now with the 100 grand i find another property worth 200 grand and i use the 100 to put a downpayment, who pays the remaining 100?
HeavyJOE you get a loan for the remaining money, then once you have a tenant in place you refinance the whole deal at the actual new value of the property, like a cash out refi, and use the cash you pull out of it to pay off the HELOC.
@@rosssims7224 rinse and repeat! LOVE IT
Hi, Can you share a list of companies that provide heloc as separate product. My mortgage company does not provide heloc and I dont want to break my mortgage with them. I am in Canada
I loved your book on investing in rentals!! I first hear of the HELOC strategy from Kris Krohn. I had been wondering what your opinion on it was!
I have used a heloc to purchase two rental properties. I purchased directly from my heloc. MY CPA told me this is a no no, that I would have to lend to my LLC first. What are your thoughts? I was thinking just transferring the money to my LLC and calling it a owner contribution
steve mahler have you found a answer for this question yet? I have the same question
Take out HELOC or credit line on your LLC owned properties vice your personal residence.
@@calivalley9056 that only works if you have enough equity. I just take money from my personal heloc and make an owner distribution to llc to purchase
Thank you for the info
Missing a step how do we repay a HELOC by getting a first mortgage?
Has anyone asked digferrent banks? My bank approved me for only $35k. Purchased my house in 12' for $143k est. Value $275k.
Can you use to but a new house to live in. House is paid for has 100k equity no mortgage no liens. Just need a bigger house
Is this still a good idea? Seems like it with lower interest rates
I think it's still a good idea. Anything works as long as it works or until it doesn't. Lol
We used our HELOC on our primary for about 2/3 of a new rental late last year. We have several rentals so we expect to have the new HELOC paid off this time next year. Pretty quick. Only 18 months. But my partner and I have been debt free. (For about 20 minutes) And that tastes pretty good. Can't wait to be debt free again.
Had to watch this video because we had no idea what Heloc stood for. Haven't ever actually borrowed against the equity on houses that we have. Awesome strategy!
The Atypical Hustlers, is a great 👍 living effect to have idea on mortgage
what banks give out helocs on homes with mortgages ? my banks will not do a heloc unless you own the home 100%
Have you ever seen lenders build loans against land? I have 14 acres worth about $120,000 and I was thinking of tapping into the value of the land to help buy investment properties
There are some lenders, from what I heard. Let me see if could get the info for you.
I used this strategy to pay for my last 3 rental properties. The bank has told me my debt to income ratio is to high and won’t let me finance my last rental. So it is still rapped up in my HELOC. Short of paying off the debt (which I can’t do fast enough) what can I do??
Are you adding your income from your rental properties into you income ratio? If so, maybe look at raising rent.
could i take out a HELOC from a property that i got with a VA loan?
Yes
Of course u can. For more inquiries, contact Jones for any inquiries.
Contact @support +1 (201) 830-1507 ( WhatsApp )
Could you get home equity loan on a fully paid for home? One of my properties will be paid off this summer.
Passive Income Tom yes you can. That is actually the best way since the banks are fully covered and you can just use a portion of your equity 🎚🇺🇸🇵🇭
Almost all banks do not HELOC rental properties. In fact my son has found one he thinks might do it, but he lives in one side and rents the other so he has that going for him.
Got about 125,000 in equity...can't touch it...credit is bad
Can I get a heloc and then rent the house out?
YES you can as long as the minimum equity requirements are met. Reach out if you need further clarification 415-862-7722
Not a fan of investing against primary residence, ie HELOC, especially if you have a family. If home was not my primary i think it’s a good strategy.
Royce Boone that’s the way to go, wouldn’t risk a home that’s not a asset itself, now the home that’s a rental is a asset and worth it 😄
Can you please talk about what your mortgage payment will look like after this process? Thanks!
Grace Villafuerte I was searching replies looking for the same answer!
Can I put heloc money into my savings account?
@Nainoa W so that I can invest it into something other than real estate, theoretically
@@dlnoir5960 Sure, you can invest it in whatever you want. It's all about ROI.
Why not just get a $100,000 loan to invest with? or a 2nd mortgage? Why a HELOC? Either way, you're still using the bank/tenant's money, but with a HELOC, you're potentially putting the house at risk. If the value of the property that the HELOC is secured with drops significantly, can't the bank cancel the HELOC and demand full repayment?
Banks do not just hand out $100,000 loans to just anybody.
Question, so if i use a HELOC do i now have 3 loans to pay off? 1st loan, my original home/rental property mortage. 2nd loan, the HELOC loan. 3rd loan, the property that i purchased with the HELOC. Can someone answer this please
That is correct. So you had better purchase wisely. In other words a property that cash flows from day one.
@@waynemiller6070 but what if my primary home, is already paid off?
I owe 140k on my business, should i use my house equity to pay that off? Paying interest on that 140k too....
Most likely yes. The interest on a heloc is probably much cheaper than whatever you have now.
Home equity is super okay 👌 got the idea from surface web cyber. @ Brandon +1 (201) 830-1507
What are the dangers of using HELOCS if when you try to refinance the home you invested in doesn’t appraise to what you expected and have difficulty paying off the loan. Since it’s an ARM, the interest rate can raise by a fair amount and can put you in deep trouble, right? Also, is there a difference between using a HELOC for a rental compared to your primary residence?
Exactly! don't drink the Kool-aid sergio HELOC strategy is gonna crash and burn had in a recession.
Bryan Shealy that’s what I’m afraid of. The best way to handle a heloc is to have more than 1 exit strategy.
It's true. Always weigh the risks and rewards. You can probably refinance to pay off some of it, assuming you've rehabbed and reappraised to a higher value. Then you must dump funds in to get it paid off first. Even at the higher rate though as long as a majority of it is paid off, you are only paying the higher interest on a small amount. If you have a day job, you can be cash flow negative for a short time. If you are dependent on the cash flow, it could be trouble. HELOC for rental compared to primary doesn't matter much. Whatever you have the most equity in is going to be the best choice.
You said a HELOC is added on top of your first mortgage, but there are first lean HELOCs. Look at replaceyourmortgage.com
Yes, if you can do first lien, it is best. You do not want a $50,000 loan called due tomorrow when you are expecting to be able to pay it off slowly.
My bills are all paid off, and I have enough to keep, worldwebcyber 👍
Kim Edinwood I want same issue to be fix pls how can i contact them
heloc and cash out refi is great but there are certain numbets u need to meet especially the DTI ratio.
Ok I've been watch way too much BP. I can tell how old these videos are based on the length of Brandon's beard 🤦♂️
I tried to use a HELOC for a new real estate deal, but my lender would not allow “loaned” amounts in a down payment, only cash. I had to use the HELOC capital for renovations instead.
Loaning to your LLC makes it available as cash.
I'm in early stages of trying to get a HELOC to purchase a new home. One of my properties is paid in full and worth 300k. It is currently a rental property. Will it be hard to get a Heloc in this environment?
Probably not if you own the home outright. Also if you're employed there should be no problem
but if you HELOC that 100k how would you buy another 200k property? would the bank add another 100k on top of that heloc money ? the bank would essentialy be giving you 2 loans. one mortage loan and another from the heloc. seems like that would be impossible to get and keep on brrrr'ing
Have a property with no leans and no mortage - about 100K. Looking for a financial partner in Virginia
I’m confused. How is it zero money out of my pocket when I have to pay 5 percent on my heloc payment?
TURTLEY SHELLTASTIC I believe it’s because you don’t have to pay the costs of selling the house
you're using all borrowed money. You don't have to take money out of your own savings account. But don't be fooled. Once you borrow that money it's your money. Your responsible for it, and you'll have to pay it back one way or the other. Hopefully with rental income.
Brandon, what investing have you been up to lately? Last I heard, you did the mobile home park deal with Mindy and other investors but I havent heard much since then..
Question: Anyone doing HELOCs on Second Homes? Please provide contact details.
Much harder to find these days.
HELOC's are dangerous long term because the minimum monthly payments are interest only. Doable, just be careful.
If the property is worth 200K, and you own 120K in equity, how can you get a HELOC for 90% of the 200K? Wouldn't you only be able to get 90% of the 120K - the actual equity you own?
90% of $200k minus what u owe. 90%/$200k=$180k minus $120k equals 60k
Last week I was talking with a real estate Investor and we got on the subject of using a HELOC to buy another property. To my dismay, he told me that the new tax law prohibits the use of a HELOC to purchase a property. Is this true or is he misinformed?
I hope this is false info..
Short and sweat
Am just happy I met Hackernarge
Rahman Atupa how can I get a loan pls
I can get into more business as much as I want Hackernarge can fix it
Rahman Atupa I want a loan from heloc I really need this help
God plan is best way by heloc, meet worldwebcyber and be owner of many properties 👌🏻
Kim Edinwood how can i contact them pls I really need this help to get approval
"and your ugly dog" hahaha